Gas export boom threatens price rises

Something new is happening in Australia’s eastern gas market. On December 14, for the first time in its 40-year history, the Moomba-to-Sydney gas pipeline began to run in reverse. Pipeline operators have completed modifications to allow reverse flow. A name change to Sydney-to-Moomba pipeline may now be in order! This reflects big upheavals in Australia’s gas market as exports expand significantly.

In Gladstone, Queensland, coal seam gas companies have invested around A$80 billion in equipment to chill gas to -160℃ and convert it to liquefied natural gas (LNG). This liquefied gas is then loaded onto ships and sold to overseas customers. Exports are well underway with over 80 70,000-tonne LNG cargoes loaded in 2015.

Eventually three times as much gas will be exported from Queensland in the form of LNG each year as has historically been used in all of eastern Australia.

In 2012, the head of a major Australian gas retailer famously referred to the planned Queensland coal seam gas export projects as “a giant vacuum cleaner for the East Coast gas market”. This vacuum has now been switched on – and it’s sweeping up gas not just from coal seam gas producers, but conventional gas producers too.

Domestic gas consumers: renters, homeowners, commercial building managers and industry, were warned they would see gas prices rise as the attractive Asian market opened up for previously landlocked eastern Australian gas.